Shyamal Majumdar: Machiavelli and the art of management

HUMAN FACTOR

Today's corporate leaders can learn a thing or two from what he taught over 500 years ago.

It's easy to dismiss the Machiavellian approach to running organisations in today's kinder, gentler world of new age, team-based management. But some management experts like James O' Toole, Senior Fellow of the Aspen Institute, finds some merit in the timeless rules and stratagems penned by Niccolo Machiavelli, who entered public life in 1494 as a clerk and became a secretary of Florence four years later.

Make no mistake. O'Toole is not an unabashed admirer of the man who believed that leaders can accomplish their goals only by being tough, manipulative, dictatorial, or paternalistic as the situation requires. Indeed, O'Toole feels most of Machiavelli's principles are outdated in the present context. Take this example of the manipulative and paternalistic style of management. When Henry Ford set up his first plant, he was generous in providing for free schools, hospitals and subsidised food for his workers "" something unheard of at that time. The "labour welfare" measures were then termed revolutionary and progressive, but Ford's approach was essentially Machiavellian (manipulative) in nature. His purpose was that his workers should have more disposable income so that they could turn out to be potential and captive buyers of the cars he produced. This met with some success. But to Ford's and the industry's utter surprise, the Ford workers one day went on strike as they found their owner was trying to be too much of a "paternalistic" manager by trying to control their lives through diktats such as one which said no worker's children could study in any other school but the one he had set up.

It is wrong to assume "" as Machiavelli had done "" that it's a jungle of greed and treachery out there in the world of business. But the fact is, however devious his principles may sound to the moral brigade, a careful reading of his ideas in his memorable work The Prince shows he was essentially trying to develop the concept of an ideal prince who would make use of many of the techniques of the enlightened rulers during his time to forge a humane and stable government. Many may not know that Machiavelli was motivated in his philosophy by the same goals as Confucius "" both had a deep underlying concern for the good of the people through stability in government. And their ideas have applications in modern organisations even more than 500 years later.

Why did Machiavelli recommend that a prince (read the CEO in the present context) must be ready to be cruel and devious? He himself gives the answer: in the long run, this is often kinder than to expose citizens (staffers in an organisation) to the turmoil let loose by a weak ruler. Read it in Machiavelli's own words: "A man who wishes to make a profession of goodness in everything must necessarily come to grief among so many who are not good. Therefore it is necessary for a ruler, who wishes to maintain himself, to learn how not to be good, and to use this knowledge and not use it, according to the necessity of the case". The operative word here, as O'Toole points out, is "according to the necessity of the case", which in other words means, "it all depends". Your management style cannot be straitjacketed and has to change as the situation demands. Even the worst of Machiavelli's critics should find nothing wrong with these arguments. After all, expediency is the name of the game in effective management.

His colleagues often derided one of the greatest business leaders of all times "" GE's Jack Welch "" as a modern-day Machiavelli. Listen to the Machiavellian ring in Welch's own words in 1982: "Managements that hang on to weakness for whatever reason "" tradition, sentiment, goodness or their own weakness "" won't be around in 1990". That explains Welch's vow to fix, close or sell any business that could not achieve market leadership. That meant layoffs "" big ones "" and by the end of 1982, GE squeezed out 35,000 employees, almost 9 per cent of the 1980 total. Simple arithmetic done by Noel M Tichy and Stratford Sherman in their famous book Control your destiny or someone else will suggests why Welch took this step. "In 1982, GE's net income was $1.8 billion. Imagine that GE had not already terminated 35,000 employees. Their average salary and benefits of a little over $25,000 per person would have increased GE's pretax expenses by nearly $900 million".

But while adopting this seemingly "cruel" style of management advocated by Machiavelli, Welch didn't forget the thinker's advocacy of a "human" face. Welch believed the victims of layoffs deserved compassionate treatment "" not only generous financial settlements, but humane consideration of their feelings. He personally answered letters of complaint from laid-off employees, and directly intervened in cases of injustice that came to his attention. Executives who mismanaged the downsizing felt his wrath.

The past and present Machiavellis were only practising a dictum that has now become an all-too-familiar phrase in India: Labour reforms with a human face.